Tuesday, March 12, 2019
Tax-exempt employers have until March 31, 2020 - the “Remedial Amendment Period” (RAP) - to retro-actively self-correct compliance issues with their 403(b) plan documents. Though this date may seem a long ways away, the process to correct the document requires significant time.
- What compliance issues can I fix?
- Employers can fix compliance issues both in their 403(b) plan documents and in separate documents that are referenced in the plan document. RAP does not apply to issues than cannot be fixed by amending the document.
- Who is eligible?
- Those that adopted a written plan document by December 31, 2009 that was intended to comply with 403(b) requirements, regardless if their plan is subject to ERISA or not.
- What are the benefits?
- An employer who fails to correct issues under RAP can lose their tax-exempt status, be able to correct the violations only under the IRS’ Voluntary Correction Program (VCP), which expends more time and money to correct compliance issues.
- What do I do?
- A tax-exempt employer can either adopt a 403(b) prototype plan document pre-approved by the IRS by March 31, 2020, or amend their plan by the end of RAP.
For more information, review the IRS website.
See For Tax-Exempt Employers: 403(b) Retirement Plan Compliance Opportunity, Medical Lawyer Spot, March 9, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.